US tech leading the rebound thanks to a big Tesla beat

European markets are on the rise in a session that has seen plenty of surprises on the data front. Early declines in the French PMI surveys brought talk of a potential 50-basis point cut from the ECB, with both services and manufacturing falling further into contraction territory. However, the German economy enjoyed a rare bit of good news since, with the improved metrics across both sectors helping to lift the composite reading to a two-month high of 48.4. Nonetheless, with the eurozone composite figure remaining in contraction territory (49.7), the ECB will need to remain on the front-foot in a bid to lift sentiment and activity in the face of depressed inflation levels.

The pound has been selling off in the wake of a PMI report that saw a surprise slump in both manufacturing and services metrics. Coming off the back of last month’s decline, October saw the composite figure fall to a 11-month low of 51.7, driven heavily by weakness in the employment metric as overall staffing levels fell for the first time this year. With UK businesses faced with huge uncertainty ahead of next weeks election that could bring a raft of substantial changes to taxes, it should come as little surprise to see many investment decisions delayed until there is greater clarity. Notably, while underlying cost pressures eased, we saw businesses continue to raise prices in a bid to strengthen their margins.

US tech stocks are expected to help drive the likes of the Nasdaq and S&P 500 higher at the open today, coming off the back of strong earnings from Tesla. While many have questioned whether Tesla should be included in the MAG7 grouping given its underperformance and lowly market cap, the company has actually enjoyed a strong period that has seen the stock outperform all but Nvidia in the past six-months. October has been a difficult month for shareholders, with the disappointing Robotaxi event helping to drive the stock 18% lower. However, with the stock expected to open 10% higher, the bulls appear to be back in charge after an earnings beat that points towards a brighter future after a difficult two quarters. Meanwhile, with markets growing increasingly confident of a Trump victory next month, investors will undoubtedly expect that Elon Musk would enjoy preferential treatment as a US-based manufacturer and member of the Trump administration.